Category
Finance
Rent vs Buy Calculator
Compare long-term renting and buying costs, break-even timing, and equity growth
Estimated time
3 min
Compare Your Housing Paths
Enter your assumptions to compare net renting cost versus net buying cost over your time horizon.
Purchase Details
$
Cash paid upfront toward purchase price. A larger down payment reduces your loan balance and monthly mortgage payment.
$
Use the annual mortgage rate (APR) you expect. The calculator converts this to monthly interest for payment estimates.
%
Length of the mortgage in years. Longer terms lower monthly payment but usually increase total interest.
years
Ownership Costs
Yearly property tax amount. This is added to annual ownership costs and not included in principal and interest.
$
Yearly homeowners insurance premium. This is separate from property tax and HOA dues.
$
HOA dues are recurring homeowner association fees. Include the expected monthly amount or 0 if none.
$
Rent Assumptions
$
%
%
Horizon and Closing Costs
years
Estimated one-time purchase closing costs as a percent of home price.
% of price
Estimated selling transaction costs as a percent of sale price when you exit.
% of sale
Model Assumptions
This comparison uses fixed carrying costs and annual growth assumptions based on your current inputs.
- Mortgage is fixed-rate for 30 years with no extra principal prepayments.
- Rent starts at $0 and changes by 0% annually.
- Home value changes by 0% annually.
- Buy and sell closing costs are set to 0% and 0%.
- Projection horizon is 0 years.
- Tax deductions, renter insurance, maintenance, and investment opportunity cost are not included.
Equity Projection
Annual projection of home value, remaining balance, and estimated equity through the selected horizon.
Equity growth: $0
| Year | Home value | Loan balance | Equity |
|---|
How This Calculator Works
Buying cost combines purchase cash needed, recurring ownership costs, and mortgage payments, then subtracts projected sale proceeds at the selected horizon. Renting cost is modeled as annual rent growth applied to your current monthly rent.
The comparison is intentionally transparent: each year we compare cumulative net buying cost against cumulative renting cost to find the first break-even year, if one exists.
Buying Net Cost Formula
Net Buy Cost = Down + BuyClose + Σ(P&I + Tax + Insurance + HOA) - (SaleValue - SellClose - Balance)
Net Buy Cost- total buying cash outflows minus net sale proceeds at the horizon
Down- initial down payment paid at purchase
BuyClose- purchase closing costs as a percent of home price
P&I- monthly mortgage principal and interest payments
Tax / Ins / HOA- property tax, insurance, and HOA carrying costs
SaleValue- home value projected with annual appreciation
SellClose- selling closing costs as a percent of sale value
Balance- remaining mortgage balance when the home is sold
Renting Cost and Break-even Formula
Net Rent Cost = Σ(Rent_0 * (1 + g)^y * 12); Break-even is the first year where Net Buy Cost <= Net Rent Cost
Net Rent Cost- total rent paid over the time horizon
Rent_0- starting monthly rent
g- annual rent increase rate as decimal
y- year index from 0 to horizon - 1
Break-even- first year where net buy cost is less than or equal to net rent cost
Assumptions to Review
- Property tax, insurance, and HOA are treated as constant nominal costs for the full horizon.
- Mortgage rate is fixed and loan is fully amortized over the selected term.
- Home appreciation and rent growth are applied annually at constant rates.
- Sell transaction costs are applied when the property is sold at horizon end.
- Results are planning estimates and should not replace lender or advisor analysis.
Frequently Asked Questions
Does this include tax deductions or investment returns?
No. This model compares direct housing cash flows only. Mortgage tax effects, renter insurance, and alternative investment returns are excluded for clarity.
How is break-even determined?
Break-even is the first whole year where cumulative buying net cost (including selling at that year) is less than or equal to cumulative renting cost.
Can buying still be better with higher monthly costs?
Yes. Even if monthly ownership costs are higher, principal paydown and appreciation can improve long-term net results.
What should I adjust first for realistic planning?
Start with rent growth, appreciation, and closing costs. These assumptions often drive the largest change in break-even timing.
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